tv Worldwide Exchange CNBC March 11, 2015 5:00am-6:01am EDT
welcome, everyone you are watching worldwide exchange. >> here are your headlines from around the world. >> stocks bouncing back right now. u.s. futures indicate a positive open after the s&p and the dow wipe out all this year's gains. brent also rising after a fall in u.s. crude inventories. >> the euro hits a fresh two year low as the qe program kicks in. mario draghi says the market reaction proves the asset purchase plan is working. >> asset purchases are unconventional but they're not
unorthodox unorthodox. they are, in fact orthodox and they are in the central banks tool box for a reason. >> stocks in focus, a deal with netflix could be sending it near the top of the european market. >> changing channel reports say uni vision is getting set for an ipo in one of the biggest media deals in years. >> welcome back to the show everyone. let's take a look at futures because we did see a major sell off on wall street. yesterday stocks across the board getting pressured by fears over a potential fed rate hike and strengthening u.s. dollar. nasdaq up 14. s&p 500 up just about 8 points in premarket trade. now the dollar was also in focus. yes, that's right. it wasn't just stock that caught
the attention of traders. the euro hit a 12 year low against the dollar. they expect the euro to fall to the dollar by the end of the year. 90 seconds by 90 cents by 2016. >> we are bouncing back today seema seema. europe was included yesterday. we know of course that policy won't be tightened which has been one of the big factors weighing in the last couple of sessions. so a little surprise that europe was involved in the sell off yesterday but it was bouncing back today. quite strongly as well. mario draghis comments giving extra to markets and highlighting the fact that even though of course we do have the growth picking up that policy will remain moving toward strong gains across the board. >> ftse 100 is in the green
today. it was weighed on heavily because of weak commodity prices. see what what are commodities doing here today? >> i'll join you at the wall. they were a big part of the story yesterday. we did see oil shares moving lower but a little bit of a bounce back. wti crude trading at $40.47. perhaps traders reacting to that. gold given the rise in volatility we saw yesterday standing about 10%. a certain level of fear given the rise in rates. that's what caught the attention of traders yesterday and in response we did see spot gold rally yesterday and today it
continues. spot gold at $1,161 an ounce. just when you thought yields could not move any lower, well they did. dipping below 2% in yesterday's trade. some saying we could see a negative yield on the ten year. something that watch as we head toward the open of trade today and the ten year u.s. trade, interestingly enough some investors saying they're going to take money out of the european monday market and put into the us. bond market. we did see selling in yesterday's trades. bonds a big part of the story. >> thanks. let's talk more about the markets and volatility in the last couple of days. >> let's touch on the big sell off in u.s. equities. what in your mind has been
driving that. >> well i have been talking for some time over the last several months that the real story in the markets is not interest rates it's really currency volatility and i think we saw that in earnest just yesterday with the euro weakening and the dollar getting to new highs. it may be the biggest trade in some time but it's a trade that's been working which is long the dollar and short the euro. it's a little bit too much too fast. obviously part of the story behind the cheaper euro the ever cheaper euro is that that's been some of the good medicine that's been helping the euro zone that was so problematic for the markets back in the fall when euro zone economic inflation me tricks
inflation metrics was starting to plummet. of course the other side of that coin is this dollar rally. too much too soon is not a good thing for appetite. certainly not here. >> of course the other asset class that investors were focused on was the bond market. what's the impact of negative yielding bonds? some traders yesterday were saying that it's resulted in some investors looking at the u.s. bond market given the yield of better than 2% on the u.s. ten year. do you think that's the case? >> absolutely. we've had qe in the u.s. and that's obviously flattened out but we have imported or derivative quantitative easing here in the united states thanks to what's happening in the euro
and european bond market. so the bond market is one global marketplace as yields get extremely low in the euro zone that flows into yield suppression here in the united states and that's a part of the whole equity story here. that if rates can be managed and suppressed the way they are, and right now the ten year yield is on par with the dividend yield on the s&p 500, that helps set the stage for a sort of goldilocks to reemerge. >> how do we hedge this volatility? this raised level of volatility? how are you playing that hedge? >> mostly with iwm or russell
options that are short dated. i like the russell because it's relative volatility levels are favorable for hedging right now. it has a lot of interest rate risk imbedded in it. if you think rates are likely to rise higher here in the united states and near term i like the russell but near dated options. i'm overall bullish here. my price target for the end of the year on the s&p 500 is 2350. i just don't think we'll get there any time in the near future but i'm looking closely as to how the fed on march 18th will address this ever strengtdenningstrengtd strengthening dollar in their negative. >> michael. thank you. we'll have another chat in a few minutes time. now jeff gunlock says now is not the time to short the dollar.
the investor said in a web cast they're showing few signs they're ready for it. a strong dollar may not be a good thing for risk assets. he also says the u.s. economy is in better shape than most euro zone economies. >> yeah, interesting comments coming in there from the widely respected bond investor. what do you think is behind the sell off in yesterday's trade. is it the stronger dollar or is it the rate hike? fears that we have been getting your tweets over the last couple of hours. joseph says that wall street is getting nervous about the easy money ending. do you agree with that? you can join in on the conversation here on worldwide exchange. get in touch with us. e-mail at worldwide at cnbc.com. some traders say it's the stronger dollar but i would say to that why are we making up now
to the negative impact of the stronger dollar? we have been seeing it climb. >> we have. it's making smart moves. i think it's much simpler than all of this. rate rise expectations were already baked in for june or september. that hasn't changed since friday. we haven't had a correction since january. we're six years into this rally. we expect marked corrections for the rest of this year. >> using a potential rate hike as a reason to sell stocks. >> absolutely. still to come investors cheer word that it could be nearing a deal with netflix. we'll tell you more after this short break.
welcome back. the market roller coaster continues. u.s. futures point higher after stocks wipe out all of gains of the year. yesterday the euro inches closer with a dollar at a fresh 12 year low and it's time for round two of the fed stress tests. find out which banks get the green light on capital plans.
draghi speaking in the last hour defended the central bank from criticism that it had acted too late adding that the asset purchase plan prevented euro zone countries from greek contagion. >> market reactions as well as experience in other jurisdictions show that the asset purchase program can work. what is the evidence that easing of financial conditions is finally starting to effect the real economy? developments in this area are pointing in the right direction. the so-called surprise index that compares actual macroeconomic data with consensus estimates and market analysis shows on average the latest muse is positive.
the slow down in growth has reversed. >> with the ecb's bond buying in focus the euro continues to slide. it's off another half percent today and in the last 14 days two weeks, the euro lid 6% against the dollar. it's very strong moves of course focussing in on the different monetary policy paths that both the u.s. and europe are on. let's get out to annetta following that speech. >> thank you, wilf. it was an interesting speak. because draghi was already declaring victory when it comes to the effectiveness of the qe program but to discuss that and also other implications and thank you for joining us. what's your major take away from the speech of mario draghi?
>> he was declaring victory in a curious way. he said we have to do qe because inflation eck peckations five years out were falling down. so we had to do something and there is success, you see in growth this year. he has two different ways to measure success and the need for it and the second was the growth and the moderate pick up in ib inflation will continue only if we fully implemented our qe program. >> but he was also saying once again that reversing that traditional argument that qe was taking the insent tif away from governments. he was saying it gives more insentin incentive incentive. >> that story about taking away the incentive for reforms is something that one cannot really prove. more fiscal room might mean that government undertakes reforms that are costly or they might do
nothing. who knows. that is an argument which is entirely political and that is an area out of which the ecb should really stay out. >> we're also discussing the benefits verses the potential risks of qe. in your view what is actually outweighing the other? >> most professional economists when they look at the numbers say the benefits are likely to be minor. mostly they're positive but minor and the risks are usually also exaggerated because the risk might be some inflation in the future. but again if you talk to professional economists they will tell you these risks can be contained. so qe is about financial market activity but probably little impact on the real economy. >> thank you very much for joining us and for your insight. so it's according to daniel a little bit like much to do about
nothing to summarize. but at the same time dragi was also saying that he thinks that the size of the qe program here in the euro zone is actually compare blt to the one in the united states. with that back to you. >> annetta thank you so much. as we were saying the euro continues to weaken against the u.s. dollar. in fact they say the wrureuro will fall to parody. it's amazing. >> particularly the last couple of weeks. many people thought that the qe was already priced in since january. we saw sharp yields after that. but the last two weeks is highlighting it and the broader u.s. dollar as well and that's so important because quantity easing in europe is still unsure how it will go to the companies but the weaker euro is a massive boost. >> especially the autos being
seen as big beneficiaries. financials got crushed in yesterday's trade and the banks will again be in focus today with the fed releasing results from the second part of its annual stress test this afternoon at 4:30 p.m. eastern. last week it said all 31 banks had enough capital to with stand a severe financial shock. today the fed will disclose whether it's approved banks capital proposals or plans to return cash to shareholders through buy backs and dividends. citi group failed the test last year on qualitative grounds. coming up we hear from one banking analyst that says now is the time to buy u.s. banking stocks. he joins us in the next hour to explain why. >> also still to come hilary clinton speaks out for the first time since her e-mail scandal. did her explanation do the trick or could this cloud her prospects? we'll discuss later in the show.
discussions with media set. the market taking the news well. they're underper post morteming down 3.9% after delivering full year profit guidance that fell shy of forecasts. speaking on squawk box europe earlier the company ceo discussed the current economic environment. >> the market will remain challenging without a doubt. there's a lot of volatility in the market and we will invest and continue to invest. so overall i would say 205015 will be a modest growth. we should not expect spectacular growth around the world. overall it will be another solid year. now adecco is in the green. that's up after 4th quarter profits beat expectations. let's get more on the story from carolyn. >> good morning to you wilf and
the world's biggest staffing company is the outperformer. expecting both on the top and the bottom line. the organic growth number was 2%. that was a little slow down from the third quarter was that dynamic, that has changed going into 2015. here's what the co said this morning. >> we lost the bite there carolyn i'm afraid but thank you very much for that. so the market taking it well. >> the index up 15% to date in comparison with the s&p 500 which is trading flat. is this the time to get bullish on european stocks? michael is the chief global strategist. the divergance continues to
widen. will this trend continue? what are your thoughts? >> no doubt europe out paced the u.s. this year. i think, though it's interesting, it reminds me a lot ant two years ago when the japanese embarked on a big balance sheet expansion by their central bank and the nikkei climbed quickly and corrected as people took profits on the trade and then went range-bound for quite a long period of time. about, a little bit more than a year and i wonder whether that play book is going to come out and play for european equities here. very solid performance thanks to the cheaper euro and cheaper crude oil and to a degree cheaper interest rates. we've seen improvements in the economic metrics in the euro
zone. we'll see an acceleration in corporate profits that's consistent. the jury is still out on that and it's a much more complicated story. >> if stocks are getting ahead of themselves because we haven't seen monetary policy move through. thank you for joining us on worldwide exchange. >> a jury in los angeles ruled blurred lines the hit pop song by robin thicke and pharell williams sounds too much like an old marvin gaye song. they decided blurred lines crossed the copyright lines. it leans too heavily on the song got to give it up. they were ordered to pay $7.3 million. it was also revealed during the trial that thicke and williams earned nearly 17 million from the song in total. >> hey, hey, hey. >> got played too much though.
>> coming up investors might be saying we're in a tech bubble but the slow down is telling us a very different story. we'll discuss that next. after the second worse day of the year for the dow, s&p 500 futures now indicating a higher open. more on today's market action and a response from yesterday's sell off coming up after this break. it's one of the most amazing things we build and it doesn't even fly. we build it in classrooms and exhibit halls, mentoring tomorrow's innovators. we build it raising roofs, preserving habitats and serving america's veterans.
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>> u.s. futures indicate a positive open after the s&p and the dow wipe out all of this year's gains. brent rising after a fall in u.s. crude inventories. >> euro hits a fresh 12 year low versus the dollar as the qe program kicks in. central bank president mario draghi says the reaction proves the asset purchase plan is working. >> asset purchases are unconventional but not unorthodox.
they are in fact orthodox and they are in the tool box for a reason. >> banks on edge. the second round of stress tests are set to reveal which lenders made the grade. >> univision is set for what could be one of the biggest media deals in years. >> thank you for joining us here. keep in mind we did see a major sell off on wall street yesterday. a lot of concerns around a potential rate hike as well as a stronger dollar. both of those pack tos weighing on investor sentiment. the dow indicating a higher open in today's trade up about 64 points. nasdaq up about 13. despite the sell off in the u.s. overnight european markets
holding ground. draghi talking about the positive impact on the economy as well as financial markets. we're looking at green pretty much across the screen here. the ftse 100 up up about 20 points. up about 1.3% for the german markets and the cac 40 with a gain of 76 points. european equities fairing well. the index already up about 15% so far this year. >> now the currency market a big story here. it measures against a basket of currencies right now up about three tenths of a percent and did strengthen yesterday as well up about 1%. so far over the past month we should show you that the dollar index is gaining about 4.5%. this has major implications on merging market currencies. >> it does. let's have a look at the currencies. some are suffering over the last few weeks.
that is at a fresh 13 year low. we have the mexican peso touching fresh all time lows. the rate decision coming tomorrow. >> it bounced back today and yesterday it had a fresh 17 year low. why is that important? well the last time it was in and around these levels was the asian financial crisis and the stronger dollar raising fear toosz whether we're heading for a similar situation. things were very different from 1998. i'd like to highlight, december last year, when the rouble was selling off so sharply they started drawing conclusions to the asian crisis. will it prove to be short lived once again now? at the moment we're in the heart of the storm the broader dollar
index is what is hurting them rather than specific country stories. >> it wasn't just currencies and stocks in focus yesterday. oil also getting hit hard on the back of that stronger dollar but today recovering just a bit brent crude trading flat. some say it's because of the data that came out overnight that could provide a boost to oil stocks and the price of oil in today's trade. u.s. crude stock piles fell by 400,000 barrels last week. it's the first time they recorded a draw down in no less than two months. >> king sal man says saudi arabia is still looking for more oil. he would confront anybody that would challenge the stability of his country amid on going tensions in the region. also creating jobs and diversethe
economy. >> shares in h&m trading lower after sweden cancelled a defense deal with saudi arabia. swedish firms warned that it could effect not only defense companies but nonmilitary companies including the retailer. the deal broke down over a standoff between sweden's social democratic lead government and saudi arabia's over the nation's human rights record. >> now hilary clinton has spoken about the scandal surrounding her e-mail use. clinton denied she violated any rules insisting she used private e-mails as it would be easy to carry one device. the state department says it will post e-mails on the website after the review. the front runner for the 2016 democratic presidential domination was asked whether the incident would have bearing on her campaign. >> with respect to any sort of future issues look i trust the
american people to make their decisions about political and public matters and i feel that i have taken unprecedented steps to provide these work related e-mails. they're going to be in the public domain and i think that americans will find that you know interesting and i look forward to having a discussion about that. >> but that wasn't all. she added a letter from republican senators to iran warning it against a nuclear deal was out of step with tradition. >> now let's talk ipos. box and shake shack report earnings this week for the first time since their market debut. according to renaissance capital, strong returns on recent ipos are essential to help future issuers come public but so far this year the u.s. ipo market has been lackluster to say the least. joining us to discuss more from
cnbc headquaters kathleen smith. kathleen, a pleasure to have you on this morning. if there's any indication we're not in a tech bubble check out the ipo market. 26 ipos priced this year. that's down about 37% year over year. why haven't we seen that many deals in 2015? >> there's a few reasons. we're up against a wall of the very strong market in 2014. we have very hard comparisons but keep in mind as well that the energy complex which was a part of the ipo market in 2014 is really down now because of lower oil prices. so we're seeing yield vehicles and financial companies are less apparent in the market. so that is the reason. i would not count out the market at all. the returns are still constructed. the ipo index that tracks the
ipo market is outperforming so far this year. the overall markets it's positive by 4% and right now we're seeing the averages have barely just broken down. so it's still a con struck tiffstructive market and we have a little bit of an air pocket because many companies wait for their calendar year audits to finish up and they'll come out. we expect to see companies coming and the market is still constructive despite volatility behind us we're optimistic this should be a good ipo market. >> in the discussions i've had with you in the past market volatility is never good for the ipo market but the volatility has been on the rise this year. especially as markets expect the fed to raise rates sometime in the summer or fall of 2015. what does that mean for the ipo market if we continue to see a rise in volatility? >> seema, you're right that volatility is not the friend of the ipo market however as we
have seen with this stock market that has climbed the wall of worry it comes about and investors get confidence that they need to own equities because they're where we can get growth companies in a slow growth economy. >> of course we have shake shack reporting results coming up. how important is it that they get a good set of first results given valuations and stock price moves. >> well for all ipos they're compared with other already trading companies and in the case of shake shack for example the fast casual fresh restaurants have been very popular among ipo investors and shake shack i think is a wall street favorite because it's given a premium because it's used so much by new york traders. anyway it's important that the company show this growth that it
has a very high multiple. it has to show that growth. there's other companies in the pipeline wanting to come out. five guys. other similar companies that are going to be priced relative to the valuations that shake shack is going to see. it won't be just about shake shack but the entire fast casual restaurant area will set a price that will effect these companies coming out. in the case of box, similarly, there's many other companies looking at howell box does because the technology area has been challenged. the companies seem to come out with high premiums on the first day but the follow through has been weak. they have only proceeded to trade down and has not yet exceeded it's first day of trading in terms of its pricing. so the box earnings will be very important tonight. investors are going to be looking at whether the company can really show this growth and
investors grew concerned about a rate hike coming earlier than expected. the sell off wasn't just rate sensitive stocks or sectors. technology stocks sold off. apple down 6.7% from its all time or it's 52 week high after the big reveal of its watch. semi-conductor stocks also trading lower. financials a big part of the story. goldman sachs down about 3%. as you can see jp morgan is also in the red. here you go. remember we do get the results of the second round of fed stress test later today. that could change the story when looking at the banks. got to point out the underperformance of energy. weighing on the s&p 500 with some traders calling for oil prices to head even lower. some of the big losers include chess pie energy and south western energy. two stocks to watch. >> absolutely. energy is one of the big reasons
the ftse 100 was the biggest lager in all of europe yesterday. and u.s. futures also pointing to a positive open and a bounce back in the u.s. we'll have to see if that holds when markets open. now univision is the biggest spanish language broadcaster in the u.s. and the company's private he equity owners have been looking to cash out for years and now they may have found a way. let's get more from landon standing by. >> hey, wilfred, good morning to you. univision reportedly hired goldman sachs, morgan stanley to lead an ipo. the company is looking to raise more than $1 billion which would value the spanish language broadcaster at up to $20 billion. that would make it one of the biggest media offerings in several years. it could come in the second half of the year. during it's last earnings call they hinted an ipo was likely within 12 to 18 months. it's headquatered in new york city but main studios and
operations are based near miami. it includes soap operas sports sitcoms, variety shows and news. it owns several cable networks and a group of spanish radio stations. it has the largest spanish language audience in the world and some beat english language networks such as nbc and primetime ratings. it was taken private in 2007 by a group of buyout firms. for $12.3 billion. mexican media company owns an 8% stake in univision and bought debt that could be converted into a stake of up to 30%. they hold three board seats and licenses programming to univision licensing revenue and royalties each year. they tried to sell themselves last year holding talks with several media companies such as
cbs and time warner but ultimately didn't succeed as reports say univision's owners were seeking a price north of $20 billion. it has grown with the u.s. hispanic population which is forecast to reach 126 million by 2050. back to you. >> thank you very much. >> let's talk more about tech. a big level departure at google. he is planning to retire. he has been at the company since 2008 and previously worked for bell canada. in a post on his page he said he's leaving to spend more time traveling the world with his wife. he made the decision after a recent trip. he leads googles earnings calls and is credited with maintaining spending discipline even as they launch projects such as driverless cars and satellites to increase internet usage. looking at price action and shares of google it did follow
the broader market sell off in yesterday's trade ending down 2.5%. >> google is in talks to buy inmobi. the start up launched in 2007 reportedly has over 1 billion users across 200 countries. it comes less than two months after twitter started zipdial. >> inmobi is one of the biggest ad networks has a valuation of over a billion dollars. so it will be interesting deal to watch if it does end up coming to fruition. speaking of google it opened it's first ever store in london as an increasing number of digital companies try to get closer to their consumers. head to our website cnbc.com to read more about that story. >> a jury in los angeles has ruled blurred lines, the hit pop song by robin thick and farrell williams sounds too much like an old marvin gaye song.
it topped the charts in 2013 and crossed the copyright line. they found it leaned too heavily on the 1977 song got to give it up. it was revealed during the trial that they earned $17 million from the song. as we head to break let's remind you of the headlines. the market roller coaster continues. u.s. futures point higher after stocks wipe out all of their gains from the year yesterday. the euro inches closer with a dollar at a fresh 12 year low and investors get a glimpse of banks capital health with round two of the fed stress test due later today.
low against the u.s. dollar. extending this broader decline that we have been seeing in the euro dollar trade and a lot of it has to do with mario draghi he hailed the central bank's qe program. he defended from criticism that it acted too late adding that the asset purchase plan prevented euro zone countries from a greek contagin. >> market reactions before and after our announcement as well as experience in other jurisdictions show that the asset purchase program can work. what is the evidence that the easing of financial conditions is finally starting to effect the real economy? developments in this area are pointing in the right direction. the so-called surprise index that compares actual macro-economic data with consensus estimates or market analysis shows that on average
the latest news is positive. the slow down in growth has reversed. >> of course mr. draghi drawing attention to the fact that europe at least is on an easing path. not a tightening path. that has allowed european markets to bounce back strongly today across the board particularly in continental europe where gains of 1.5%. >> we'll have to see if that helps u. s. stocks in today's trade. right now futures are indicating a higher open after what was an ugly day for wall street. the second worst day of the year for the dow and s&p 500 trading at one month lows but as i said dow indicating a higher open. s&p up by 8. >> the fed will release results from its stress test this afternoon. all banks had enough capital to with stand a shock.
it will talk about whether it plans to return cash to shareholders through buy backs or dividends. joining us is the vice president of equity research and financial sector analyst. good morning to you. thank you for joining us. we've had round one as i just mentioned. what are we going to learn from round two today? >> banks have more than adequate capital to meet the environment and that's what the first round of the stress test showed. most banks should be able to increase their digit activitys or stock buy back programs and that will be revealed today. however if the fed has made the decision that it wants them to have even more capital than was required a few months ago there will be questions about how much they'll be allowed to put through.
>> so if the second round of the stress tests prove to come in better than expected is this the time to get bullish on banking stocks? because the s&p financial sector is the second worst performing in 2015 and some of the big banks did sell off as a part of the market sell off in yesterday's trade. so is this the time to get in? >> well i think it was a time yesterday to slit your throat but given the fact that you might not want to do that if you take a look at bank stocks over the last 12 months what you can see is we'll use the kbe which is the s&p etf that relates to bank stocks. it's down 4% in a period in which the stock market itself is measured by the s&p 500 is up 9.5%. the stocks are not down because of any problems with their businesses. their values are up. their dividends are up. except for the banks that have gotten the litigation expenses. if you look at 2015 all three of
those are going to be up again. you're going to see an increase in book value, dividends and earnings. so the question becomes when are investors going to get comfortable enough with the stratus of the banking industry to allow them to start buying these stocks again because these stocks are unbelievably cheap. >> we'll have to leave it there. thank you for joining us today. the vice president of equity research and financial sector analyst. let's have a look at the euro dollar before we end the show. it's fallen down 106. that means over the last two weeks the euro is down some 6.5% against the euro dollar really highlighting the divergent monetary policy path between the u.s. and europe. that's it for today's show here on worldwide exchange. thank you for watching. >> next up is squawk box. have a great day everyone.
there's a rebound setting itself up early this morning. we'll see whether that follows through. pointing to a slightly higher open this morning and -- and i say and after this higher open this morning, and the focus remains on the fed. just days to go until the next fomc meeting and the feds are getting nervous that the easy money is about to end. maybe the easy money has already been made in the stock market
with friday and yesterday. it's wednesday. march 11th 2015 and squawk box begins right now. >> live from new york where business never sleeps this is squawk box. >> good morning, everybody. welcome to squawk box here on cnbc. i'm becky quick with joe kernen. andrew is on assignment. our top story the global markets. u.s. equity futures are looking better than they were yesterday at this time. looking at some bit of a rebound but right now the dow futures up by 74 points. yesterday dow was down by 332 points. yesterday was a huge drop for the s&p with a 35 point decline. nasdaq is up by 16 points above fair value. let's check out the european markets in the early trading